Bulls & Blogs

USDA makes qualifying for a mortgage a little easier

Loan Guidelines, Owner-occupied, Residential Mortgage Comments Off

Feb 202016

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

USDA offers one of the few no-money-down loans, but its credit restrictions have disqualified some first-time homebuyers who don’t have established credit histories. USDA required a loan applicant to have at least 3 credit accounts with a 12 month or longer payment history.

That changed last week. USDA dropped the number of required accounts to 2, which makes it a little easier.

For homebuyers who don’t use traditional credit that appears on a credit report, USDA still allows the use of non-traditional credit accounts to achieve the required 2. Non-traditional credit includes rent, utility, and insurance payments.

However, good payment histories on non-traditional accounts cannot be used to replace accounts that appears on your credit report. In other words, if your credit score is low because of negative items on your credit report, USDA won’t ignore these items just because you have good payment history for rent and utilities.

USDA making housing loan a bit more expensive

Loan Guidelines, Loan Programs, Residential Mortgage Comments Off

Aug 052015

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

USDA is raising its guarantee fee for the Rural Development home loan program on Oct 1st. The Rural Development program is one of the few no-money-down loan programs. It’s only available in areas USDA considers rural in nature, but that definition includes a lot of exurbs of major TX cities.

The guarantee fee is up-front mortgage insurance due at loan closing. Most borrowers choose to roll the fee into the loan amount rather than pay it at closing.

The fee is rising from 2% to 2.75% of the initial loan amount. On a $150k home, that will raise the monthly payment by about $5.50 at today’s interest rate.

USDA is not changing its monthly mortgage insurance rate, called the annual fee, which remains 0.5% of the loan balance.

Please note that USDA will apply the change based on the date it commits to the loan, not the date the borrower applies. In order to beat the change, you really need to find a home this month as it generally takes about 30 days from contract signing to USDA loan approval.

Qualifying for a mortgage with student loans

Loan Guidelines, Residential Mortgage Comments Off

Feb 122015

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

If you have student loans, qualifying for a mortgage just got easier. Fannie Mae and USDA both have updated loan guidelines to reduce the loan payments that we must count when qualifying you.

For loans in deferment, the new guidelines cut the percentage of the loan balance we must use when calculating your total monthly debt from 2% to 1%. This is a big deal because it reduces the impact of student loan debt by 50%. Further, if the actual payment is less than the 1% calculation, the guidelines state that we can use that lower payment, but only if it fully amortizes the loan.

Unfortunately, if the lower payment is due to an income-based or graduated repayment plan, we have to use the 1% fixed amount. Under these payment plans, the monthly payment may rise, which means the current payment may not provide an accurate estimate of the loan’s impact on your finances.

While USDA already has implemented the new guidelines, the changes won’t apply to conventional loans until 4/1.

Act quickly if using USDA home loan

Loan Programs, Owner-occupied, Residential Mortgage Comments Off

Nov 122014

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

If you’re using a USDA RD loan to purchase a home this fall, Fri, Nov 21st is a very important date. At the close of business that day, USDA will stop accepting applications for the remainder of Nov. If your loan has not been approved by USDA, you will need to sign new application documents, and the effect could add a week or two to your loan processing time.

USDA has adopted new regulations for its RD program, and it doesn’t want to maintain two processing systems. Thus, it will stop taking applications after next Fri and clear out its queue. This may not be a trivial task given the backlog of applications in some areas. On Dec 1st, USDA will start accepting applications under the new regulations.

If you have a pending application, check with your lender on its status. If your lender needs any documentation from you, act on that request urgently. The new regulations aren’t likely to harm your chances for approval, but if you have an early Dec contract date, the delay in processing could bust your closing.